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"Ever wonder if City Council is as contentious and chaotic as it is sometimes portrayed? Here you can get a progressive perspective on some of the issues from someone who spent four years in the trenches. Totally unbiased, though!Feel free to comment but keep it respectful, just like they do at council."

Sunday, May 5, 2013

Putting London on the map

When Joe Fontana decided to resign from his position as MP for
London North Centre in order to take a run at the mayoralty race in
London in 2006, he announced that he would “put London on the map.”
It’s now 2013, and indeed he has. Not by bringing the world
figure skating championships to London—that had already been done
by the council that served until 2010 under the leadership of former
mayor Anne Marie DeCicco Best—but by the distinction of having
headed up the largest charity in Canada, an organization which on Friday
had its charitable status revoked.

That's because, according to the Canada Revenue Agency (CRA) news
release, Trinity Global Support Foundation, had been involved in
activities that weren't all that charitable. While Trinity had been
boasting about the thousand of lives it was saving through the
provision of antiretroviral drugs for AIDS sufferers in Africa and
the Carribean, it had in fact been inflating the value of those
drugs, if indeed they had been delivered, to allow “donors” to
escape paying taxes. While Trinity claimed to be feeding hungry
school children, it failed to mention that it had been feeding the
pockets of its directors and related individuals and corporations
with hundreds of thousands, perhaps millions, of dollars.

And that's while Trinity was relatively small potatoes. The CRA
based its audit on the period from 2007, when Trinity was first set
up the mayor's childhood friend and former business partner Vince
Ciccone, until May 31, 2010. Fontana was recruited as a board member
at the end of 2008, quickly became president, and then moved to
chairman of the board to let his son, Ugo, take over the presidency.
Over that period, according to the CRA, Trinity had collected some
$25M in cash and “in kind” donations for which it issued tax
receipts. The following year, it would collect about $72M and last
year, $152M. Those more lucrative years seem not to be included in
the audit.

Still, even on that reduced scale, the case for revocation becomes
pretty compelling. Trinity had teamed up with a tax shelter, Mission
Life Financial Inc. Together, they drummed up $1.13M in cash
donations and paid themselves $1.03M. Somehow, those cash donations
turned into $16M in pharmaceuticals, at least on the tax receipts
issued to donors. The CRA refers to these receipts as “grossly
inflated”. Indeed.

Another scheme was Canadians Care whereby donations to Trinity
were “invested” in Ciccone's group of companies. In 2010, Ciccone
declared bankruptcy leaving his investors without their capital
investment and no sign of the 20% return on investment promised. Last
fall, Ciccone reached a settlement with the Ontario Securities
Commission (OSC) after promising to pay back his investors $15M, to
stop dealing in securities, and paying a penalty of $750,000 and a
fine of $100,000 to the OSC. It is doubtful that any creditors,
including Trinity which forked over $7M to Ciccone, will ever see
their money.

At the hearing at which Trinity attempted to retain its charitable
status, Trinity lawyer Duane Milot argued that Trinity had learned
from its mistake about investing in Ciccone's business; it had only
done so because Ciccone had promised a high rate of return. It a
tough argument to buy, since Ciccone himself was on the board of
Trinity, and one of the people making the pitch for investing in his
group of companies was none other than Joe Fontana, chairman of the
board of Trinity. Not exactly arm's length.

Somehow, about $865,000 of those “leveraged” donations ended
up in the pockets of individuals and organizations related to
Trinity's directors. Ciccone himself got $325,000 for arranging the
deal and a partner a similar amount. Still, Milot had suggested that
Trinity should retain its charitable status so that it could recoup
the losses.

Recently, someone suggested to me that, as chairman of the board,
Fontana could not really be expected to know about these activities;
he would be operating at too high a level to give oversight to the
details. But the audited statements reveal that over those early days
of his tenure, Fontana was paid $41,000 in consulting fees for
promotion, advice, communications and government relations. His son,
Ugo, received over $62,000 as president. Surely one of them would
have known what was going on!

The CRA media release is very brief and short on details. Only 223
words are devoted to dealing with the specifics of the case; the
remainder is a standardized statement for all cases of revocation. It
names no individuals, only organizations. And it doesn't deal with
the years 2011 and 2012 when Trinity became the largest of Canada's
86,000 charities, issuing receipts more than three times the next in
line.

Fortunately, local media has been more forthcoming. Chip Martin of
the London Free Press has dealt extensively with this case even
before the CRA issued its warnings to Trinity. His investigative work
has shone a light on matters which are usually dealt with behind
closed doors.

Martin's reports have been picked up by media outlets around the
world. Thanks to the activities, alleged and founded, of our mayor,
London Ontario is indeed “on the map.”

It may not be public information...but I would sure love to see a list of donors to Trinity. Specifically, I'd be interested to know if Mr Fontana - or any other Board members or associates - were contributors and were therefore gaining outsized tax credits in return for undersized donations. It would really be interesting because it's a given that all those recent inflated tax receipts will be cancelled by the CRA leaving contributors owing the Government a lot of money.